In a deal that underscores the demand for prime residential rental properties on the Golden State’s coast, an affiliate of Western National Group has paid $95 million for a seaside property in San Clemente, Calif. The seller, TRECAP Partners, had owned the 368-unit Seacrest Apartment Homes since 2006.

The interest in the deal and the price tag resulted from supply-demand dynamics in the market. “Most institutional buyers recognize there is a limited amount of truly coastal multifamily assets in Southern California with views of the Pacific Ocean,” TRECAP Senior Vice President and Managing Director Edward Oprindick told CPE. “This is unlikely to change dramatically over the near term due to the lack of available land and the cost associated with acquiring what land is available.”

Rather than refinancing the maturing loan on the property, TRECAP encouraged its clients to bring the complex to market, Oprindick explained. Further enhancing its appeal to prospective investors, the 23-year-old complex had received a thorough freshening up only two years ago. The renovation added new appliances, carpets and crown molding to the units. Located on a 25-acre seaside parcel, the complex also features swimming pools, a picnic area, a fitness center and a business center. Many of those amenities offer ocean views.

TRECAP is projecting strong risk-adjusted returns for the multi-family sector compared to other asset classes during the next year. Even in the face of sluggish economic growth, Oprindick said, “the current supply / demand imbalance for multi-family is arguably better than it has ever been over the last 10 years.” Indeed, he contended that demand and pricing for multi-family assets have yet to peak. Markets nationwide are experiencing double-digit rent growth, which will take about net operating income about 18 months reflect completely. Once properties are stabilized, he said, “Those who purchased quality assets in quality locations should be rewarded with significant cash flow for years to come. However, we are starting to see some buyers price growth the same for all markets.”